New Digital Phones May Foil Pirates, Lower Prices

THE wireless telephone industry is bracing for a competitive free-for-all that could turn into a bonanza for cellular-phone consumers.

They will likely see new wireless services, higher-quality connections, and more secure conversations. Phones will become more portable and double as pagers. The price of wireless phone calls could drop significantly as companies scramble to sign up customers.

But there's a catch. A phone that works in Washington, D.C., may not connect in Walla Walla, Wash., because the service there uses a different standard. At least three such standards are vying for dominance, a competition that might not be settled for years.

In the meantime, ''it's going to be really confusing for the user,'' predicts Rebecca Diercks, program director of wireless research at Business Research Group, a market-research firm in Newton, Mass.

The reason for the new competitive spirit in wireless is an emerging technology called personal communications services, or PCS, an all-digital wireless network.

The first commercial PCS company began offering service to the Washington-Baltimore area last month. The company, American Personal Communications, is one of a select group of companies with a special federal pioneer license to set up PCS service first. It promises to charge 10 percent to 40 percent less than what cellular telephone companies have traditionally charged.

But other PCS providers are not far behind. Today, the regional telephone company BellSouth is scheduled to announce a PCS trial in Chapel Hill, N.C. BellSouth plans to roll out the service commercially in North and South Carolina in the middle of next year.

More security

The advantage of PCS over traditional cellular services is that it's all digital. This makes it much harder for telephone pirates to make unauthorized cellular calls and also allows the phones to act as pagers.

''We're interested in how wireless technology might fit with our longer-range telecommunications plans,'' says Steve Harward, telecommunications manager for the University of North Carolina at Chapel Hill, which will participate in the trial. The university will get half of the trial's 200 phones. Potential users include medical staff, campus police, and researchers who work in multiple offices.

But traditional cellular telephone companies are not standing still. They too are upgrading from analog to digital service. Bell Atlantic Nynex Mobile, which offers cellular service in Washington and Baltimore, has already begun selling its own digital services.

''There's nothing magical happening in the new spectrum [with PCS] that can't happen today through Bell Atlantic Nynex digital access,'' says Steve Fleischer, spokesman for the company, based in Bedminster, N.J. The company has introduced a lower-cost service that competes directly with American Personal Communications' PCS offering. Monthly fees are as low as $15 a month with per-minute charges of 35 cents or less. Some analysts expect more such price drops as competitors jockey to sign up consumers.

While all wireless telephone providers are going digital, they're adopting separate flavors of the technology. BellSouth and American Personal Communications are using a popular European digital standard. Many traditional US cellular-phone companies are adopting a rival one. AT&T, which owns the largest cellular-phone company in the US, is pushing yet a third standard.

Busy signal

The problem is that a phone operating on one standard won't work with a service using another. Industry insiders and analysts expect these competing standards to coexist for quite some time.

''In seven to 10 years, the technologies probably meet together somewhere,'' says Eric Ensor, president of BellSouth's PCS subsidiary. By then, phones may be ''smart'' enough to be able to switch between one service and another. But technology won't determine the winners, he adds. ''Who is going to win out are the players that have set out the best pricing plans.''